Category: Consumer Bankruptcy

  • Telling Anecdotes About Bankruptcy Filers

    Posted by

    Pamela Foohey

    The very recently released Issue 99:3 of the American Bankruptcy Law Journal features the return of its book review series. My co-authors Robert Lawless and Deborah Thorne and I are honored that the journal’s editors picked Debt’s Grip: Risk and Consumer Bankruptcy for the series re-introduction. Professors Alexandra Sickler and Edward Janger kindly wrote book reviews, as well as participated in a recorded roundtable hosted by ABLJ and the National Conference of Bankruptcy Judges focusing on the book.

    In our response to their reviews, Anecdotes on the Data in Debt’s Grip, we highlight some of our go-to stories of bankruptcy filers’ journeys through financial hardship, as written to us, via the survey we send to the people who file bankuptcy. These stories are vivid reminders of people’s struggles. Or, as Ted Janger wrote, “[t]he picture painted by [us in Debt’s Grip] is dark.” Still, we hope that sharing the stories — in our response and in Debt’s Grip itself — will bring some light to the financial precarity faced by households across the United States.

    The full new issue of ABLJ is here.

  • How Not To Do A Bankruptcy Literature Review

    Posted by

    Jason Kilborn

    I was excited to see a new article purporting to offer a “bibliometric analysis of research on personal insolvency.” My excitement soon turned to disappointment as I realized how fundamentally flawed the “analysis” was. To make lemonade out of lemons, I offer this cautionary tale for future analysts to avoid a research method gone horribly wrong. (more…)

  • Encouraging People To File Bankruptcy — A Book To Recommend To Potential Clients

    Posted by

    Pamela Foohey

    A few months ago, Slipster Bob Lawless, former Slipster Deborah Thorne, and I published Debts Grip: Risk and Consumer Bankruptcy. The book draws on eleven years of data from the Consumer Bankruptcy Project to document the financial consequences of decades of risk privatization for individuals and families across the United States. Some people ultimately will file bankruptcy. Over the past few months, during panel discussions, podcasts, and interviews, we have been asked about the value of people filing bankruptcy earlier. We (well, at least I) think that for many people, filing sooner would be advantageous. People deplete their assets in the years they struggle before filing and suffer psychologically and physically from the stress of unmanageable debts. Based on our data, the stigma of bankruptcy and the inability to make good on their contracts remains a barrier to filing. So, how to encourage people to file? And, relatedly, how to make people feel “good” about their bankruptcies such that they have a better chance at succeeding when they are released post-bankruptcy into the same economic and social structure that may be stacked against them?

    I recently spoke about Debt’s Grip as part of the National Association of Bankruptcy Attorneys‘ meeting. There I saw Adrienne Hines, a bankruptcy attorney from Ohio who I knew from her social media presence as The Lady Like Lawyer (Instagram, TikTok). I picked up her new book, Bankruptcy Magic: The Life-Changing Power of Debt Relief With Dignity. The book puts into a written guide format for people the core message of her social media: that filing bankruptcy can be an effective solution to unmanageable debt challenges for which people do not need to feel ashamed. Adrienne’s social media accounts are an excellent resource for struggling debtors. Her book may be even more excellent. It is part of the answer to the question of how to encourage people to file sooner.

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  • Singapore’s “Debt Relief Agency” Proposal and Flashbacks to BAPCPA

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    Jason Kilborn

    The Singapore Ministry of Law has launched a public consultation on some proposed personal insolvency amendments, and one in particular struck a nerve based on the disaster of BAPCPA: “MinLaw proposes to introduce a new criminal offence which criminalises the soliciting and canvassing, in the course of any business, of any person to make a bankruptcy application.” The proposed punishment is a S$10,000 fine, three years in jail, or both! The justification for this aggressive proposal is a supposed “increase in the number of debtor-initiated bankruptcy applications where debtors borrow irresponsibly to pay for … consultancy firms’ services in helping them apply for bankruptcy” with the supposed intent of “abusing the [debt repayment scheme] to obtain a discount off their debts.” Sound familiar? This is reminiscent of section 526(a)(4) of the US Bankruptcy Code, introduced in the 2005 disaster, that forbids “debt relief agencies” to “advise an assisted person … to incur more debt in contemplation of such person filing a case under this title or to pay an attorney or bankruptcy petition preparer” for preparing such a filing. (more…)

  • Revision of Chinese Enterprise Bankruptcy Law Leaves Natural Persons Waiting

    Posted by

    Jason Kilborn

    The Chinese National People’s Congress yesterday began reviewing a set of major revisions to the 2007 Enterprise Bankruptcy Law. Details on this first major reform effort in nearly 20 years are not publicly available (!), but Xinhua reports that it involves more than 160 new and revised provisions on such topics as post-filing property transfers, optimizing reorg provisions, “and enhancing judicial cooperation in cross-border insolvencies”. This all sounds promising. What’s not mentioned? A long-awaited and much-debated national rollout of personal bankruptcy. Pre-eminent bankruptcy scholar Li Shuguang has characterized the current enterprise-only approach as “only half of a bankruptcy law,” and he had earlier noted that “c]onditions for introducing a personal bankruptcy system are now largely in place, [including] improved institutional frameworks, shifting societal views, and local pilot programmes” in such places as Shenzhen and Wenzhou, among others. Nonetheless, despite a worrying rise in consumer debt and accompanying social tensions, national authorities continue to resist introducing proper treatment protocols for the personal (and small business) side of the bankruptcy hospital.

    Another pre-eminent Chinese bankruptcy scholar years ago taught me a proverb that captures this situation perfectly (as 4-character chengyu distillations of Chinese wisdom so often do):  因噎废食 (yin ye fei shi), meaning “not eat for fear of choking.” This phrase encapsulates the danger of being overly conservative about engaging in beneficial behavior due to fear of some possible but unlikely bad outcome. Personal bankruptcy reformers around the world have faced these very fears over and over during the past 30 years (especially but not exclusively in Europe), and the bad outcomes have been muted if not entirely absent. It’s time for China to stop starving its increasingly consumer- and small-business-dependent economy due to fear of bad societal effects of treating natural persons’ insolvency. But for now, it seems China’s overindebted consumers and small entrepreneurs will have to continue to wait.

  • Debt’s Grip Now Available!

    Posted by

    Bob Lawless

    Debt's Grip CoverToday is the official release date for our new book, Debt's Grip: Risk and Consumer Bankruptcy, from the University of California Press. Debt's Grip uses eleven years of court records and surveys from the Consumer Bankruptcy Project to provide a thick description of what it means to live in financial precarity in the United States. Through personal narratives from our surveys, bankruptcy filers describe in their own words the privations and struggles they suffered. It has been a privilege to work with Pamela Foohey (also a Slips blogger) of the University of Georgia and Debb Thorne of the University of Idaho to put this book together. 

    We wrote the book so it would be accessible to nonlawyers. The second chapter of the book describes the bankruptcy process in plain English. We then continue by documenting the increasingly lengthy period of time people sit in the financial "sweatbox" before filing bankruptcy. The next three chapters are built around types of debts–home and car debts, medical debts, and credit card and other unsecured debts. Demographics are part of the bankruptcy story. A chapter discusses how the bankruptcy system both reflects and exacerbates larger patterns of racial inequality. Another chapter looks at the overrepresentation of women and especially single women raising children. We then look at the fastest growing group of bankruptcy filers — adults age 65 and over. The book then turns to how debt collection and changes in that industry have shaped bankruptcy filings. The final chapter was supposed to be about the exceptions — bankruptcy filers with resources who were using the system to escape debts they could pay. I say "supposed to be" because we could not find those cases from the 8,800 files in our sample. Well, we did find one, but the court dismissed the case!

    The book is available from the UC Press, Bookshop.org, Amazon, Barnes & Noble, and other outlets. We have a busy semester of events where we will be discussing the book and are always looking for more opportunities. 

     

  • Unjust Debts on the Road

    Posted by

    Melissa Jacoby

    Unjust_debts_finalFirst, thanks to Bob Lawless for his post about my new book. It has been great to engage with people about Unjust Debts so far, and especially appreciated the book making a new Financial Times best books list (links to that and other coverage here). Wanted to note a few upcoming book events for Credit Slips readers:

    • June 27 (TONIGHT): Greenlight Bookstore, Brooklyn NY, in conversation with Zephyr Teachout. Information and RSVP here. 
    • July 1 (VIRTUAL): Commonwealth Club World Affairs, in conversation with Senator Elizabeth Warren. Information and registration here. 
    • July 8: Politics & Prose, Washington DC, in conversation with Vicki Shabo. Information here. 

  • Alex Jones, Chapter 7, and the Means Test

    Posted by

    Jason Kilborn

    I'm embarrassed to have fallen into an analytical trap that yet again reveals the absurdity of the means test. When I saw that Alex Jones was converting his personal Chapter 11 case to Chapter 7 liquidation, I wondered, "how in the world could Alex Jones pass the means test?!" Well, a quick look at section 707(b) reminded me that some pigs are more equal than others: the means test applies only to debtors "whose debts are primarily consumer debts." The $1.5 billion defamation debt obliterates the means test … because of course Alex Jones's personal bankruptcy case is not an abuse of the system (!). Further evidence in support of the thesis of Melissa's new book, it seems.

  • NIL and Bankruptcy

    Posted by

    Adam Levitin

    Bankruptcy lawyers are familiar enough with issues presented but NOLs. And NILs (name, image, likeness rights) have existed for as long as the modern Bankruptcy Code. But those rights have usually come up in the context of debtors with established, valuable brands (e.g., Mike Tyson). Now college atheletes can enter into NIL deals, and for many of them the value isn't yet established and there might not even be licensing deals yet. That situation poses the question of to what extent unlicensed NIL rights are property of the bankruptcy estate, and not of the debtor?

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  • A Trump Bankruptcy?

    Posted by

    Adam Levitin

    Will Donald Trump file for bankruptcy? It's certainly a possibility as Trump struggles to come up with a supersedeas bond for staying the NY Attorney General's civil fraud judgment against him while he takes an appeal.

    I don’t know the strength of Trump’s possible arguments for an appeal, but the legal arguments might be beside the point. If Trump wins the election, the entire dynamic of the litigation changes. Is the New York Attorney General really going to enforce a judgment against the President-elect, particularly one who is likely to be vengeful once in office? Maybe, given that we will likely be facing an period of extended lawfare, but the calculus for enforcement or settlement shifts in Trump’s favor if he wins election. That means that Trump’s best move might be trying to run the clock until Election Day:  7 months and 17 days.  And maybe not even that long. The optics of pursuing the collection on the eve of the bankruptcy will make it look very political and might generate sympathy for Trump. So Trump might only need to run the clock, say, 6 months. That’s where bankruptcy comes in.

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